INSIGHT-Italian olive grove stands in way of European energy security

| MELENDUGNO, Italy

MELENDUGNO, Italy Oct 4 In the name of European
energy security, a private guard wearing a navy blue uniform,
aviator sunglasses and a baseball cap walks around a grove of
olive trees in southern Italy.

The 231 trees, surrounded by dry-stone walls on a dusty
plain near the Adriatic coast, stand in the way of a $45 billion
pipeline designed to bring gas from central Asia and help wean
the European Union off its dependence on Russian energy.

Local authorities want the pipeline re-routed away from the
prized grove, which includes trees thought to be more than 400
years old, but developers have Rome's approval to proceed, on
condition they are transplanted while pipes are laid and buried.

Wary of protests, the pipeline consortium, which includes
Britain's BP, Azeri state energy company SOCAR and
Italian gas company Snam, has hired 24-hour security.

In reality, work on the Italian side of the Trans Adriatic
Pipeline (TAP) cannot proceed without local consent, threatening
to delay a project that is meant within four years to carry the
equivalent of 10 percent of Europe's Russian energy imports.

The olive grove, whose oldest trees are recognised as part
of the world heritage by UNESCO, represents more than a weak
link in European energy security.

It also highlights an issue at the heart of Italy's biggest
constitutional reform debate in a decade: the power of local
authorities to thwart Rome. Prime Minister Matteo Renzi proposes
to dilute that power in a Dec. 4 referendum.

"None of the regions are happy with this reform because they
fear they will be weaker in the face of the central government
and will have to suffer things they don't understand, like TAP,"
said Michele Emiliano, the regional governor of Puglia, Italy's
biggest olive oil producer and a popular tourist spot.

Italy's economic development minister has previously accused
Puglia's government of using the grove near the town of
Melendugno, and thousands of other trees further along the path
of the pipeline, as an excuse to block the project.

"If it passes the referendum will ensure a more sensible
division of powers, especially in the energy sector," the
minister, Carlo Calenda, told Reuters in an email.

The TAP consortium, which also includes Belgium's Fluxys
<FLUX.BR >, Spain's Enagas and Switzerland's Axpo,
says it has asked Rome to work with Puglia to finalise tree
removal and is confident the issue can be resolved soon.

"Even if the go-ahead is delayed it would only mean a
narrowing of the time frame for moving the trees, not a stop to
the project," said TAP's country manager for Italy, Michele
Mario Elia.

FEW SIGNS OF LIFE

There were few signs of life when Reuters visited the olive
grove outside Melendugno just over a week ago. Apart from the
security patrols, there were some fenced-off areas where
archaeologists are required to make preliminary excavations, to
check for any buried antiquities before the pipeline work can
begin.

"There is a risk that some olive trees won't survive," said
Melendugno mayor Marco Poti, explaining that transplanting them
could expose them to xylella, a bacteria that has wiped out tens
of thousands of trees in recent years.

In approving the project last year, Rome imposed dozens of
conditions, including one requiring a total of about 10,000
olive trees to be carefully removed to allow a trench to be dug
for the pipeline. Later, they are to be returned and replanted.

Puglia is threatening to go to the constitutional court if
the project goes ahead without its consent, arguing Rome never
properly consulted the region. Puglia points to a recent court
ruling stipulating that the central government should consult
the regions before approving international pipeline projects.

Rome says it fully consulted Puglia before giving TAP the
go-ahead.

Olive trees can stir deep passions in Puglia where they
blanket the countryside and form part of the region's identity.
Plans to destroy some infected trees last year had to be
scrapped when protesters climbed them and took to the streets.

"I presume the same thing will happen this time round,"
mayor Poti said.

Local regulations say the developers have from Nov. 1 to
April 30 to move the trees in their slow-growth period but full
clearance to do so has still not been granted.

If that window shuts, they cannot begin until November 2017.

The 878-km (546 miles) TAP project will run from the
Turkish-Greek border and carry gas across Greece, Albania and
the Adriatic Sea to the small Italian beach of San Foca.

It is the last stage of the so-called Southern Gas Corridor
that is meant to pump 10 billion cubic metres (bcm) of gas each
year, expandable to 20 bcm, from Azerbaijan's giant Shah Deniz
II field into European markets.

For Brussels, it is a way of diversifying away from Russia,
the EU's top energy supplier. Italy imports about 90 percent of
its energy and hopes the TAP pipeline will enable it to become a
gas hub for southern Europe. Anna-Kaisa Itkonen, a spokeswoman
for the European Commission, declined comment on the dispute.

BUILDING SANDCASTLES

In Melendugno's sleepy town square, views are split. Some
believe the investment will breathe new life into the area and
others fear it will threaten the region's tourism.

"The town is divided but the majority doesn't want the
pipeline," said 72-year-old pensioner Pantaleo, standing beneath
a tree in the square, chatting to friends.

Another local concern is that the pipeline will make
landfall at the popular Puglia beach of San Foca, on the Salento
coast, famous for its sparkling blue waters. TAP plans to bury
the pipe about 10 metres below the beach.

"Would you bring your little girl to build sandcastles over
a pipeline with a pressure of 145 bars?" mayor Poti says.

But the developers say gas pipelines have been built beneath
eight other top Italian beaches without any impact on tourism.

"Spain's Enagas has also recently built a gas pipeline under
the famous Cala Gracio beach at Ibiza and there's been no impact
on tourism at all," said TAP's Elia.

As part of the project, an underground concrete tunnel will
extend 700 metres inland and 800 metres out to sea where general
contractor Saipem will join it to the undersea
pipeline laid out under the Adriatic. Saipem has agreed to pull
the pipe through the tunnel in winter when few tourists are
around.

On the other side, gas grid company Snam will build
a 55 km pipeline to link TAP to the national grid.

Puglia's governor, Emiliano, wants the pipeline to land
further north at the city of Brindisi where he says it could
connect directly to Snam's existing gas network.

"Neither the government nor TAP has explained to us why it
has to arrive so far south," he says.

But TAP executive Elia says studies showed the Brindisi
option to be unfeasible. The central government insists local
authorities were involved throughout the permit process.

TAP developers secured government clearance for the pipeline
on May 20 last year. But Renzi's government attached 66 demands
- some of which can only be fulfilled with the cooperation of
local authorities.

The clock is ticking.

As an incentive to speed up work, Brussels offered to exempt
the TAP developers from an anti-trust rule if they started work
by May 16 this year at the latest and finish within four years.
The rule would require TAP to allow rivals to use the pipeline.

TAP - which has cordoned off the Melendugno site, swept for
unexploded war bombs and checked for archaeological relics -
says it officially started work on May 16.

Rome had also set May 16 as a deadline for the start of
project work. But regional governor Emiliano says construction
work has not begun and has asked the central government to
restart the approvals process from the beginning.

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